GM Announces a $20 Billion Stock Buyback With Shares Flat This Year. Longtime Investors Face a Different 401(k) Question
GM just authorized $20 billion to buy back its own stock, but for a retiree with a quarter of their 401(k) tied up in a single automaker, that headline obscures a much more personal and costly calculation lurking in the…
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General Motors (NYSE:GM | GM Price Prediction) announced on October 20 that its board approved a new $20 billion multi-year share repurchase authorization with no expiration date. Investors shrugged. Shares sit near $81, essentially unchanged for 2026, even after rising about 17% over the past 12 months.
Picture a 62-year-old who has owned GM since the early 2010s. His $500,000 401(k) has a brokerage window that allows individual stocks, and $125,000 of it, or 25%, is GM. He plans to retire at 65. The buyback headline does little to shrink the risk in his retirement math.
What a $20 Billion Authorization Actually Promises
Buybacks shrink the share count, so each remaining share claims more profit. GM’s shares outstanding fell to 849 million from 904 million at the end of 2025, which helped third-quarter adjusted EPS reach $3.70, beating the $3.63 consensus.
The $20 billion is permission to buy, with no schedule attached. CFO Paul Jacobson said “We don’t give any forward commentary on what we’re going to do on buybacks for obvious reasons,” and said repurchases continue “as long as the valuation remains depressed.” Management also noted roughly $2 billion in commodity, logistics and memory chip costs this year, plus EV restructuring payments running into 2027.
Higher EPS can still happen with a falling share price. GM closed at $82.75 on October 19, then fell to $77.09 on October 20, the day it reported earnings and announced the buyback.
A 20% Slide Costs $25,000 Either Way
Run the rough math. If GM drops 20%, his position loses $25,000, and the account falls to $475,000 with everything else unchanged. No buyback authorization prevents that.
If he sets a 10% limit for any single stock, that means holding no more than $50,000 in GM, or $75,000 less than he owns today. At that weight, the same 20% drop would cost $10,000 instead of $25,000.
Withdrawals Carry the Tax Bill on 401(k) Money
Selling GM inside a traditional 401(k) causes no capital gains tax. The bill arrives at withdrawal, taxed as ordinary income, and that is where the cascade starts. Large withdrawals can also make up to 85% of Social Security benefits taxable.
Medicare adds another potential cost. In 2026, the standard Part B premium is $202.90 a month. Married couples filing jointly with income above $218,000 enter the first surcharge tier, adding $81.20 for Part B and $14.50 for Part D per person each month.
If both spouses are enrolled in Parts B and D, that’s about $2,297 in additional annual premiums. Medicare generally looks back two tax years, and the thresholds will change before this investor reaches 65.
Concentration makes this worse. If GM falls when he needs cash from that position, he’ll have to sell more shares to raise the same amount. Born in 1964, he’ll generally face required minimum distributions (RMDs) at 75. Those withdrawals become mandatory, although he can choose which holdings to draw from, subject to his plan’s rules.
Three Moves Before Your Next Statement
- Measure your single-stock weight across every retirement account. Divide your GM value by your total balance. The amount above a 10% weight is $75,000, and any rebalancing inside the 401(k) causes no tax today.
- Compare that exposure with the diversified funds already on your plan menu, such as an S&P 500 index or target-date fund, then read your plan’s rules on brokerage window trading, blackout periods and fees before rebalancing. If your shares sit in your employer’s own company stock fund rather than a brokerage window, get tax advice before selling, since special rules for employer securities may apply.
- Map future withdrawals against Medicare’s income thresholds, which change over time. The years between retirement and RMDs can offer opportunities to withdraw or convert pretax money in measured amounts (we sized up that window in a free Roth conversion guide you can grab here).
GM shares move to the Nasdaq on Nov. 17, and CEO Mary Barra expects next year to be “another strong year and better than 2026” if demand holds and costs ease. A buyback reflects management’s plan for GM’s cash, while position size in a retirement account reflects the owner’s own risk tolerance.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
